Tokyo rubber futures rose modestly on Friday as traders made adjustments to correct recent steep falls ahead of the weekend and the expiration of the prompt August contract next week.
Hedge funds, which have been active sellers recently, were detected locking in profits by covering short positions following slight gains made on Thursday. The benchmark December contract on the Tokyo Commodity Exchange (TOCOM) closed unchanged at 135.6 yen per kg.
It had moved in a range of 134.7 to 136.4. Other contracts were flat to 2.6 yen higher. "The market is in short-covering mode as hedge funds and other players want to see how the August contract expires," said a trader at a Japanese commodity brokerage.
The August contract expires on Monday. It closed at 145.7 yen, up 2.6 yen from Thursday.
"I don't think the trend has reversed the underlying trend is weak but for the time being the market is reluctant to hammer (the key contract) below 132.9 yen," the trader said.
Yen-based rubber futures have come under selling pressure as rising physical supplies have hurt sentiment. On Wednesday, the key contract fell to 132.9 yen per gram, it's lowest since December 3.
It had dropped nearly five percent in a week. Turnover of TOCOM rubber was estimated at 4,811 contracts on Friday, compared with Thursday's 5,797.
Open interest amounted to 39,129 contracts at the end of Thursday, down slightly from 39,864 on Wednesday.